What a finance director does and how to find a great one

Being a business owner is a complex juggling act: you’re under pressure to make the important long-term decisions for your company, as well as overseeing the day-to-day running and control of the business activities.

But you can’t be an expert at everything and that’s why you need an experienced and competent team to advise you.

To run your business effectively – and keep sane – you need to be sure that not only your basic tax compliance is being taken care of but that you have someone on top of the numbers who can give you a more strategic view of your business’s performance, now and in the future.

As time goes on, more and more owner-managers recognise the need for on-going support from a financial expert, but a full-time FD is a luxury, they feel, they can’t afford.

At the start-up phase most of the FD’s functions will be carried out by the business owner/founder, but as the company expands, at some point, the financial management practices must scale up to match, otherwise there a risk of holding back growth. (See our Business Review Checklist here). This is when you need a great finance director to spur you on to a new level.

Budgeting and planning

FDs need to know their numbers, not just for budgeting purposes but for helping plan business development. It’s their job to ensure you’ve got enough income to cover your overheads now and into the future, by understanding the costs of acquiring new customers – and how they synchronise with the business growth costs of acquiring new assets and staff.

See our guide on how to keep your cashflow strong here.

Leadership

They should not be afraid to challenge the chief executive, MD, founders, or other senior executives. Their role is to ensure decisions are informed by the best financial knowledge of the whole of the business, helping businesses stay efficient as they grow. Not only can they have great input in board meetings, but they can also help prepare them: providing financial information, analysis, and recommendations.

Legal and HR

A great FD shouldn’t just bring knowledge of financial processes and how they relate to your business. Ideally, they should have good knowledge of legal and HR protocols, as well as knowing when they need to call in the experts. This will help your business run smoothly and add strengths to multiple areas of your operations under one hat.

Monitoring success

Different businesses require different key performance indicators (KPIs). If designed and established well, KPIs produce the most informative analysis. For the strongest of foundations, finance directors should be highly skilled in monitoring, understanding, and establishing the company’s metrics.

Want to know more about the above? Download our Business Review Checklist here.

Most FDs are qualified accountants, but whether this is the case or not your ideal candidate will be someone who can keep on top of the numbers as well as displaying an operational focus.

Today’s FD is expected to be a much more dynamic character with an abundance of commercial acumen - compared to his or her counterpart of ten or twenty years ago - with the vision to realistically assess risks and opportunities. Of course, some things never change, and technical ability, resilience, honesty, integrity, and the right qualifications will always be at the foundation of the role.

The top personal attributes to look for when employing an FD:

• Excellent communication skills – with the board, across the business as a whole and with shareholders and the outside world
• Wider people skills, particularly the ability to lead a high calibre team
• Commerciality and an ability to display an understanding of the business, its markets, and customers
• The confidence to support and challenge the managing director or chief executive
• Decisiveness- the ability to make decisions, sometimes with imperfect information

In addition, they need to be skilled in:

• Data presentation

Reporting on and clearly communicating financial information is the keystone of an FD's effectiveness. The ability to break down complex data to inform wider action-planning is essential, as is having the technical acumen to communicate that knowledge to those without similar experience.

• Business strategy

A well-informed perspective on the impact of internal processes, customer needs and industry influences will ensure financial insight is drawn from a good knowledge base. Being able to think long-term and apply commercial thinking to financial planning distinguishes a good FD.

• Systems Management

The development of necessary policies and procedures to ensure the sound financial management and control of the company’s business is key to the FD role. With the speedy development of new financial systems software to aid the implementation of processes by staff, increasingly a great FD needs to be tech savvy and able to appreciate the operational possibilities of new technology.

• Futureproofing

Keeping up with industry trends and anticipating how evolving technology will impact not just the FD role, but the wider business as well. Advances in artificial intelligence and automation in data collection and reporting are set to have a significant impact on the responsibilities of financial professionals. An up-to-date working knowledge of new laws, regulations and compliance standards is essential to protect the organisation from potential ramifications.

It has to be said that being an FD is a pretty skilled job and not only being able to find, but also afford the right candidate is not an easy task for a small business. That's why many accountants now offer companies a package of outsourced services that can help them fulfil the role.

So how can a business owner get access to a cost-effective service that fulfils the traditional FD role?

If you are considering employing a finance director and want more help and advice the Richardson Swift team specialise in consulting with owner managed businesses to ensure they get the solution that’s right for them. You can find out more about our finance director services here.

If you are ready to speak to someone then book an initial consultation with Debbie and find out more about how we could help.

To help business owners keep their cash flow strong in the coming months Debbie has also produced a free Business Review Checklist. Click here to download your copy.